The Buying Process

The process of buying a home or investment generally starts with determining your buying power; that is, your financial reserves plus your borrowing capacity. If you give a yourself some these basic information about your available savings, income and current debt, these information can help you to select the vaious options you might have with any financil institution.

Finding the Property

Once you know how much you can and want to invest, the next step is to find the properties that most nearly fit your needs. This is the time to search a real estate. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by you to find all available properties. Internet searching should be your first and one of the most effective option in finding both visible real estate properties and hidden properties.

Selecting

Your job is to make the final selection of the right property for you. This is when excitement and emotion run high. The internet search can assist you in the selection process by providing objective information about each property. By using the internet, you have access to a variety of informational resources. Visit you local city's Planningand Development offices, they can provide local community information on utilities, zoning. schools, future land and area development etc. There are two things you'll want to know when purchasing a real estate property, first, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

Negotiating

There are a myriad of negotiating factors, including, but not limited to price, financing, terms, date of possession, and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should also provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your Real Estate Lawyer can advise you as to which investigations and inspections are recommended or required.

Due Diligence

With a negotiated agreement in hand, it is time to complete the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your agent can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your agent, title company or attorney can help you resolve issues that might cause problems at a later date.

Financing

As soon as you are reasonably sure the property is right for you, the process of obtaining financing begins. Your financial institution and Real Estate Lawyer can help you in understanding different financing options and in identifying qualified lenders.

Spend no more than 2 1/2 times your income on a home. For a down payment, it's best to come up with at least 20%. Many buyers in recent years have stretched the limits of affordability, and have bypassed the traditional 20% down model. But make a smaller down payment, and most lenders will require you to have private mortgage insurance (PMI), which adds a minimum 0.5% of the loan amount to your mortgage payments, about $1,000 more a year on a $200,000 principal.

Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%. These guidelines include payment on all loans, such as school and auto loans and credit card debt.

Also remember to take into account other home-related expenses to judge a house's affordability. Property and school taxes, home insurance and energy costs and requirements can vary considerably around the nation.

Try to estimate future maintenance costs and work them into your budget. Some homes, especially older ones, may require more regular upkeep than homes built with more modern materials. Roofs, siding and heating, cooling, plumbing, and electric services may have to be replaced within a few years of purchase.

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